RMB Experiment Risks
Further to a previous post on China’s soon-to-be experiment in financial reform and RMB convertibility in Shenzhen’s Qianhai economic zone, here is a Reuters analysis of the risks involved. The key issue is that once you open a small valve, how do you prevent companies and individuals from exploiting it for speculative gain. Full convertibility of the RMB remains a long and arduous process and while some analysts believe full convertibility may occur in 5 years, I stand with those who feel that it probably won’t happen until the end of the decade or even later and with certain contols.